Lazard: not like the other advisory shops (because you won't get paid)

If you ask people about what they think the elite investment banking advisory firms are (not bulge bracket banks), you will usually get a list that includes Greenhill, Evercore, Moelis, Lazard, Perella Weinberg, Centerview, Blackstone, Houlihan, etc. The one thing these firms don't have in common though: compensation at the junior levels.

In recent years it seems that Lazard had been paying in line with the lowest paying of the bulge brackets. Generally the past few years all of the other advisory only shops (and Lazard's closest peers) have paid more than bulge brackets.Understandable given that some of the bulge brackets just paid government bailout funds back in the past few years and the smaller shops had been taking market share in advisory.

This year things only got worse. Senior associates and junior VPs at Lazard were paid so little last winter that they made in some cases over $100K less than what their peers at other shops made. The analyst class this year on a relative basis looks worse as well. Top bucket for first years was 55 and top for 2nd was 65. First years at peer shops are getting more than 2nd years at Lazard. Their peers will be much higher (first year at BX was 30K higher than Laz last year).

The other thing that the "top" numbers at Lazard don't say compared to peers' comp is that other advisory shops have less buckets so their bottom vs. top bonus spreads are not as large; hence, the average vs. top spread will also be lower at peers.

So the intersting question is why? There has been talk in the media about Lazard compensation being persistantly higher than peers as a % of revenue (see Bloomberg article below). Laz persistantly pays junior people much less than peers, but somehow pays more of its revenue out as compensation. There are two possibilities: 1. The senior bankers at Lazard can't generate as much revenue per banker as their peers or 2. the senior bankers take so much more pay than at peers that even by paying junior people much less, overall compensation as a % of revenue is still higher at Lazard.

Either way if I were considering taking a job at Lazard I would want to know about this. IMO the implications of both possibilities above are 1. you will work with a bunch of B-team senior bankers who can't compete to generate as much revenue as senior guys at EVR, Moelis, Greenhill, etc or 2. the senior bankers will work you and underpay you so they can keep more for themselves. Lazard doesn't have a reputation for having bad senior guys from what I know, so 2 seems like the better possibility. Thoughts?

http://www.bloomberg.com/news/2012-06-20/peltz-sai...

Comments (12)

Aug 18, 2012

Bitching is the LAST thing I would do if I was paid 70k+55k+(relo)+(sign on) as a 22 year old kid.

Aug 18, 2012

Are you even in the industry? If everyone else is getting paid more than you, why would you stay if you had other options? Plus 70k is barely enough to break even in NY.

Aug 18, 2012
HarvardOrBust:

Are you even in the industry? If everyone else is getting paid more than you, why would you stay if you had other options? Plus 70k is barely enough to break even in NY.

Yea, have several years in the industry. Good point...why would you stay? I don't think people will put up with year after year of getting underpaid at Lazard before they move on and some are leaving for that exact reason. The point of the post is that people coming in to Lazard should know what they are getting themselves into before they show up and don't think they are going to make as much as their friends at Greenhill or Moelis or whereever else.

Aug 18, 2012

Sorry but my post wasn't directed at you, more towards the guy above me

Aug 18, 2012
HarvardOrBust:

Sorry but my post wasn't directed at you, more towards the guy above me

Ah, my apologies. Thx

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Aug 19, 2012

$55k top bucket seems to be relatively in line with the street this year, so I don't really see a problem there... I can't speak about VP/Associate compensation, but if you're an analyst, $135k one year out of school (70+10+55) is a pretty good deal, plus the Lazard name on your resume.

Other numbers:

http://dealbreaker.com/2012/08/bonus-watch-12-well... http://dealbreaker.com/2012/07/bonuslayoffs-watch-12-Barclays-2/#more-83633
http://dealbreaker.com/2012/07/bonus-watch-12-JPMorgan-3/#more-83470

Also, I don't know anything about numbers at BX, Houlihan, GHL, etc., which is why I'm pulling data from BB banks. You claim that junior bankers get paid crap at Lazard, but without any numbers from any of the other firms you compare them to (except the BX data point), it's just a little difficult for me to buy that claim.

Aug 18, 2012
CHItizen:

$55k top bucket seems to be relatively in line with the street this year, so I don't really see a problem there... I can't speak about VP/Associate compensation, but if you're an analyst, $135k one year out of school (70+10+55) is a pretty good deal, plus the Lazard name on your resume.

Other numbers:

http://dealbreaker.com/2012/08/bonus-watch-12-well... http://dealbreaker.com/2012/07/bonuslayoffs-watch-12-Barclays-2/#more-83633
http://dealbreaker.com/2012/07/bonus-watch-12-JPMorgan-3/#more-83470

Also, I don't know anything about numbers at BX, Houlihan, GHL, etc., which is why I'm pulling data from BB banks. You claim that junior bankers get paid crap at Lazard, but without any numbers from any of the other firms you compare them to (except the BX data point), it's just a little difficult for me to buy that claim.

Yea, well as I said the 55K is also misleading b/c Laz has way more buckets than it's peers (4 or 5). BX for example pays everyone almost the same. Also, no offense to Wells Fargo, but if you work at Lazard (which is supposed to be really prestigious), you wouldn't expect to get paid $5K less. BMO Capital Markets was $65K for first years. That's 10k higher than Laz too. Plus even though first year JPM is inline with Laz, 2nd years at JPM were 5K higher (Laz only added 10K above 1st years for 2nd years but JPM added 15K per your link). You would be hard pressed to find a strong named bank that paid less than Laz (the lowest seem to be exactly in line), but it's pretty easy to find many firms that are more comparable that paid way more.

Aug 20, 2012

I have it on pretty good authority (friend who was top bucket at Laz) that it was 65k for first years; no data on second-years. Honestly just curious: what's your source?

Aug 19, 2012

I can confirm top buckets at Moelis, Centerview and Perella were significantly higher than 55k this year.

Aug 18, 2012
3boy:

I can confirm top buckets at Moelis, Centerview and Perella were significantly higher than 55k this year.

Centerview was like 35K higher once you add in the higher salary I believe. Evercore was way higher too (think 15-20K higher once you include the higher salary for analysts)

Aug 25, 2012
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